Ever since the financial meltdown of 2008, economic thinkers have wondered whether the free market thirsty for oil and nostalgic for the good, old, bad, old days of easy profit could ever learn from the errors of its rapacious ways.
After all, in the shadow of that calamity, the rich did, indeed, get richer, the poor did, indeed, get poorer, and the middle class became almost mythological throughout much of North America.
Even more maddening, perhaps, is the certainty that many of the very institutions that played key roles in engineering (or, at least, ushering) the near-collapse of the global economy have been bolstered, rehabilitated and otherwise rewarded with public money – money that is now no longer available to pay for the necessities of civilized life, such as rational, affordable health care and higher education.
All of which is reason enough for public intellectuals, such as French economist Thomas Piketty, to conclude that capitalism is, at its core, breathtakingly Nietzschean. In the introduction to his best-selling book, Capital in the Twenty-First Century, the professor at the Paris School of Economics, states that “Modern economic growth and the diffusion of knowledge have made it possible to avoid the Marxist apocalypse but have not modified the deep structures of capital and inequality – or in any case not as much as one might have imagined in the optimistic decades following World War II.”
Why? Mr. Piketty explains: “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”
Still, he’s not entirely without hope. “There are nevertheless ways democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests, while preserving economic openness and avoiding protectionist and nationalist reactions,” he writes.
The rest of his tome is essentially a 577-page set-up for a series of recommendations for savagely curtailing the savagery of capitalism, itself.
But, at least one Nobel Prize-winning economist thinks that while his colleague “is right about the severity of the problem, he is not completely right about its cause – and how to fix it.”
In an article that appears in this month’s Harper’s magazine, Joseph Stiglitz, chief economist of the Roosevelt Institute, argues, in effect, that the fault is not so much in the social and political systems and institutions we erect but in ourselves for failing to keep them healthy and honest.
“There is no such thing as a ‘purely’ capitalist system,” he writes. “We have always had a mixed economy, relying on the government for investment in education, technology, and infrastructure.” Indeed, he pointedly adds, “the most innovative and successful industries in the U.S. economy (tech and biotech) rest on foundations provided by government research.”
His bottom line is that “a well-functioning economy requires a balance between the public and private sectors, with essential public investments and an adequately funded system of social protection.”
Of course, that notion has been out of style for nearly 35 years. Both Reagan and Thatcher revolutions, which marked the ascendence of neo-conservative cultural warriors and their fellow travellers on Wall Street, made puppy chow out of the once cherished and credible proposition that good governments play a legitimate role in curbing the excesses that turbulent competition is bound to produce.
Still, had such creatures (good governments) existed prior to the financial crisis, there’s every reason to believe that the awe-inspiring income inequalities, joblessness, consumer debt, and fiscal malaise entrenched in public institutions of every variety would not so bedevil us today.
It is even conceivable that elected officials would ply their trade with a certain decorum and circumspection, knowing that the voters they woo do not, in fact, find all politicians utterly loathsome.
As New Brunswick heads ever closer to an election that many pundits have predicted will be conspicuous for its failure to inspire much confidence in any political party, we mustn’t forget that democratic governments are the only protections we have against the predations of the marketplace.
When we don’t respect our public institutions and refuse to care for them, they will weaken, dissolve and vanish.
Then, dear citizen, enjoy facing the free market in all its rapacious glory.